A work in progress: the new South Africa's first fifteen years

Inroads: A Journal of Opinion, Summer-Fall, 2008 by Robert Cohen

The ANC knew that overcoming this legacy would take time and effort. From exile, ANC President Oliver Tambo had engaged directly with the nongovernmental White South African business community since the mid-eighties. The ANC assembled an expert team of economists, not all of whom were South Africans. Among them were Thabo Mbeki, who had a master's degree in economics from the University of Sussex, and Tito Mboweni, named in 1999 as the first Black Governor of the South African Reserve Bank, who had received his master's in development economics at the University of East Anglia. Several, including Mbeki, had also spent time in eastern Europe studying and experiencing the Soviet system.

A conscious decision was made to reject the state-socialist model in favour of a market-oriented approach guided by the objectives of social democracy. The aim was to gradually reduce the inequality that gave South Africa one of the highest Gini coefficient scores in the world. Lessons on social policy were drawn from Sweden, northern Europe and Canada, while east Asia was looked to for economic policies.

Three key programs have steered ANC economic policy: the Reconstruction and Development Programme (RDP), Growth, Employment and Redistribution (GEAR) and the Accelerated and Shared Growth Initiative for South Africa (AsgiSA). The RDP came out of a consensus-building process beginning with regional workshops throughout the country organized by the ANC with its partners in the governing Affiance--the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP)--as well as other civil society groups. The RDP formed the core of the 1994 ANC election manifesto, with specific commitments to the building of one million houses for the poor and access to water, electricity, education and health.

The RDP combined state interventionism with fiscal conservatism, linking growth, development and redistribution. The economy was to grow from increased domestic demand including that of the poor, and export expansion based on product competitiveness. A commitment was made to sound fiscal management by financing redistribution not through new unsustainable taxes but through increasing government revenues resulting from economic growth, as well the cutting of other expenditures, most notably the defence budget--thus preempting the demands of the International Monetary Fund and the World Bank.

The ANC government broke with important SACP and COSATU elements when it introduced the GEAR program in 1996 to replace the RDP. This time, there were no "bottom-up" consultations, but only limited "top-down" consultations by Deputy President Mbeki with senior leaders of the Alliance. GEAR set targets on government expenditures, with a 3 per cent ceiling on the budget deficit and limited wage increases. It aimed at privatization and liberalized trade. The years that followed saw much development based on public-private partnerships and free trade agreements negotiated with the EU and other countries. An agreement was signed with the United States to encourage African imports. The rand started to stabilize in the early 2000s.